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Medical Marijuana: California's Booming Market Offers Substantial Tax Revenues, Report Finds

Submitted by Phillip Smith on (Issue #467)
Consequences of Prohibition

Medical marijuana is a billion dollar a year business in California, according to a new report, and the state's bottom line could improve dramatically if it were taxed like other herbal medicines. The report, "Revenue and Taxes from Oakland's Cannabis Economy," was prepared for that city's Measure Z Oversight Committee by California NORML head Dale Gieringer and and Oakland Civil Liberties Alliance board member Richard Lee.

While the report focused on Oakland, which has seen medical marijuana revenues and the taxes derived from them decline dramatically since the city tightened regulations on dispensaries in recent years, it also looked at state and federal data to attempt to draw a state-wide picture of the size of the therapeutic cannabis industry. According to the data, the state's medical marijuana patients are currently consuming somewhere between $870 million and $2 billion worth of weed a year. That would translate to somewhere between $70 million and $120 million in state sales tax revenues, the authors estimated.

But currently, the state treasury is receiving nowhere near that because many dispensaries do not pay sales taxes or keep financial records that could be used against them in a federal investigation. Other dispensaries and patient groups argue that nonprofit collectives and co-ops should be exempt from taxes.

The study estimated the number of California medical marijuana patients at between 150,000 and 350,000. There is no firm figure, because unlike many other medical marijuana states, there is no comprehensive, statewide registry of patients. Those patients each smoke about a pound of pot a year.

Medical marijuana patients account for about 10% of California marijuana users, the study found, suggesting that tax revenues from a legal recreational marijuana market would skyrocket into the low billions of dollars each year. The state is currently spending about $160 million a year to arrest, prosecute, and imprison marijuana offenders, and not collecting any tax revenue from recreational sales.

State officials have a fiduciary responsibility to the citizens they represent. This report makes clear just how miserably California officials are shirking that responsibility.

Permission to Reprint: This content is licensed under a modified Creative Commons Attribution license. Content of a purely educational nature in Drug War Chronicle appear courtesy of DRCNet Foundation, unless otherwise noted.


Anonymous (not verified)

"Other dispensaries and patient groups argue that nonprofit collectives and co-ops should be exempt from taxes."

Medicines should not be taxed. PERIOD.

Fri, 01/05/2007 - 7:35pm Permalink
Yep (not verified)

In reply to by Anonymous (not verified)

Why not? It's a consumer, not a public good. If it's not taxed, where's the money that goes into medical research and production going to come from? You have to think logically, it all comes down to money, and where else would the money come from? You can't just say THIS SHOULD BE FREE. IT SHOULD ALL BE FREE. WE SHOULD MAKE IT FREE. The issue with using the word 'free' when talking about a product is that "free" can mean many different things. It's not free to make, circulate, etc., if you want it free for anyone, somebody else has to cover the costs.

Mon, 10/25/2010 - 6:57pm Permalink
Anonymous (not verified)

I agree,
I can barly afford my medicin as it is, taxing it would mean I get less, hurt more, work less, and make less $... a steady downfall if you ask me!


Fri, 01/05/2007 - 9:13pm Permalink
Yep (not verified)

In reply to by Anonymous (not verified)

Not taxing would mean a bigger cut of your paycheck. The money has to come from somewhere.

Mon, 10/25/2010 - 6:59pm Permalink
Anonymous (not verified)

You are quick to jump at the clubs blaming them for price gouging for marking up their prices but did you know that federal law still says it is illegal? This is common knowledge, i know, which is why it frustrates me when people complain about club prices. Medical Marijuana club owners are facing federal prosecution, raids, and humiliation so should should their prices be as low as your local highschool dealer? NO! It would definately be nice but until federal law changes prices should and will stay up.

Thu, 05/24/2007 - 2:32pm Permalink
Anonymous (not verified)

I want to know where all the marijuana is going with all the recent 'store' closures. The growers must have an excess
of medicine ready to go bad because it's not being moved. The patients are hurting and the prices are cruel. Why does
guyringer allow that? advocate $5 ounces of Dank and $3 ounces of schwag(stress) for the patients. Arnold don't help.
How long will we have to wipe his asp? make calls write letters bug the guy about not being healthy from lack of medicine.
What happened to Let Us Pay Taxes and the Billion with a B dollars he was offered? I tried to find a coop I grow great 'tomatoes' and I tried to get hooked up in a patient way bringing to the coop. However all the Stores and Deliveries turned
out to be Just DRUG DEALERS. Jim McGowan, David Chavez Sr. David. Chavez Jr. ad inf. Time for the patients to be more responsible pick up the doobs and write letters The people behind prohibition are the one making the money. Talk about a phuked up way of life. But this is America and and and Goodday.

Sun, 11/25/2007 - 10:27am Permalink
Anonymous (not verified)

the excess from closed clubs just ends up in the streets obviously. im a patient and i do find it very annoying how high the club prices are. you can easily get better deals on the streets. clubs also do shady stuff to make their money. like change names of weed and fluctuate prices to make it sell better. clubs get trees for extremely cheap prices, compared to both the streets and the prices the clubs charge for it. and obviously if marijuana were just made a legal cash crop it would be dirt cheap. patients shouldnt have to turn their wallets inside out to obtain relief. but i guess thats how all of the medicine industry works....

Tue, 08/12/2008 - 11:23pm Permalink
Anonymous (not verified)

i am a grower from mendicino co. just making it through the season ,ripoffs,cops,bugs,water shortages,andforest the have to run the gauntlett of k.9. patrolles. to get to the city.where the clubs are now getting pounds fronted to them for2300 a p. no garenty some of these ars holes will pay you. the patiants are getting ripped off ,the growers are getting ripped off.while the mafia "s are making a killing.none of it is right. its all a scam.capitalizm rules the day

Thu, 12/17/2009 - 8:46pm Permalink

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